Time consistency in petroleum taxation - the case of Norway

Because of a long time frame, irreversible and specific investments, incomplete contracts andpolitical constraints, it is generally difficult for governments to commit themselves in a credibleway to a fixed petroleum tax regime. Many controversial renegotiations and tightenings of suchsystems have occurred internationally over the past couple of years. By contrast, Norway hassucceeded in building credibility as a reasonable tax collector because the government initiallytailored the rates imposed to economic, geological and technological conditions, and thengradually changed into a neutral and stable tax system...